Texas two-step bankruptcy
- A legal strategy involving Texas corporate law where a company splits into two entities so that one entity can declare bankruptcy to manage liabilities such as lawsuits while the other can be used to protect the company’s assets
- The company used a Texas two-step bankruptcy to shield its profitable division from the lawsuits its shell company faced.
- Critics argue that the Texas two-step bankruptcy maneuver is being used to evade financial responsibility.
- Some businesses explore Texas two-step bankruptcy to minimize the impact of large legal claims on their operations.
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